Potential Steve Jobs Impact

  • Posted: 01 February 2011 01:32 PM

    Hi All,

    I’ve been checking out these forums for a while, but only decided to post now. I’d like to start by saying thanks to a lot of you that have done such an amazing job projecting the future growth of this company over the past few years..

    With that said, I am surprised there is not more talk about Steve Jobs on these forums. I really hate to speculate about a man’s life but Steve is too important to AAPL not to discuss the fallout of his potential death.

    Considering the impact his death would have on the stock (I would imagine at least -15% and a permanent move backwards in P/E), I have tried to do a little research into his current condition, as well as survival rates of people that have/are going through what he is going through. In my opinion, it unfortunately does not look good for him.

    I again should reiterate that is it horrible to have to do this, as I really respect Steve and all he has done, but I’ve just got too much money on the line not to think about it.

    A few observations:

    1) Apple is incredibly thorough in their words. Every single word is chosen carefully. In my opinion, the fact that they chose the word ‘hope’ in the context they did (“I love Apple so much and hope to be back as soon as I can”) tells me that we are looking at a very significant chance that he won’t be coming back, ever.

    2) I am an Apple brand lover, I’ve never used a PC and was playing on Macs since is was 10 years old. I bought the first iPod ($800 and looks like a brick at this point), iPhone and iPad. I really believe that Steve is THE visionary of this company. I know the executive team can handle the reigns in the short term, but I am worried about 2-3 years from now, when they have to take over Steve’s vision. I am very much in doubt over their ability to do this.

    3) I believe P/E will take a big hit if it is announced that Steve isn’t coming back. P/E is a reflection of investor confidence in the companies ability to grow earnings and investors will lose a lot of that confidence in such a case. I would be one of those investors.

    4) If everyone is in agreement that Steve is the best CEO in the world, then losing him will have a negative impact on the company. Otherwise you would be saying that the role of a CEO is not important. I understand he’s built a great team, but building a great team is a quality of a great CEO. Apple will need to continue to build and shape their team in the future. Will the new CEO be able to do this?

    5) Anyone have any information on his health? He’s been through one of the worst and deadliest forms of cancer and has had a liver transplant, which was due to a complication from the cancer. What types of complications develop from a liver transplant? What are the odds of survival from those different types of complication? What is the life expectancy of someone who has been through both? I really think these questions need to be answered (not necessarily on this forum, just in general), and I believe their answers will shed significant light on the future of AAPL.

         
  • Avatar

    Posted: 01 February 2011 06:14 PM #1

    Interesting subject for your first post.  If your worried about SJ send him a card and wish him well, because cancer is unpredictable.  As far as Apple the company, I think the management team is the best in the world and will survive the CEO transition when it occurs.  The stock market will manipulate any news to max effect so the retirement of SJ will have an immediate effect, but long term impact is unknown.  To think there is no other leader who can step into SJ shoes is naive IMO, I think the company will continue to generate outsized revenue & profit vs the current consensus projections I’ve seen, wether SJ is running the show or not.  We will need to wait and judge any future leadership based on their own merits.

         
  • Avatar

    Posted: 01 February 2011 06:33 PM #2

    I think we should probably just say “Steve Jobs permanently leaving apple” rather than refer to his passing, as I find it a bit too low class. Plus it also includes the possibility of Steve Jobs abruptly retiring from apple for whatever reason, which would have the same effect on the stock most likely.

    On topic - I would expect a compression of the PE multiple in the short term if it ever happended, but the more time goes buy the less compression it would have on apple for the following reasons:

    - Apples huge, growing stockpile of cash, will prevent any severe PE compression.
    - the more time that passes with SJ on leave, the more successfull growth, earnings announcments, product updates/launches will take place, and the market will realise that apple is more than just one man
    - Steve Jobs has created an amazing culture at apple, with a senior team that appears very on target, and I dont forsee any speedbumps due to SJs absence.
    - look at the price & growth targets for the next few years by the wonderful talented members of the AFB, and you will see that even if there are no new product lines (im betting there will be though), that apple is positioned for massive growth and any short term blip in stock price caused by SJs departure will be short lived.

    In the end, in my opinion, only those who are playing near term options or are operating on margin accounts have anything to worry about - those who are long term long on AAPL have nothing to worry about if SJ permanently leaves apple.

    Signature

    Full Disclosure:

    - Long Apple
    - Pro: Apple HDTV, iPhone Air, Stock split, Consumer robotics

         
  • Posted: 01 February 2011 06:49 PM #3

    Most people fail to see the forest ( apple’s management team ) through the tree (which is Steve ). 
    I feel very comfortable with the management of apple even after Steve decides it’s time to step away and enjoy retirement.

         
  • Avatar

    Posted: 01 February 2011 06:56 PM #4

    Ok, so if your scenario is correct. Let’s answer some questions.

    1. What kind of position should one (or you) hold in AAPL if you believe that? Stock, stock/options, Cash until you hear otherwise, etc.?

    2. How do you protect to the downside?

    3. How much of a hit will the stock take immediately?

    4. When do you buy if you have available funds? Immediately, 1 day, 1 week, never?

    5. Will you sell none, some, all of your position when that news comes?

    6. Also, do you think that SJ will be back this year?

    Personally, I think it will be one of the better buying opportunities, regardless of what P/E is handed out (it’s already low).
    I’d be interested to hear AFBers answers.

         
  • Avatar

    Posted: 01 February 2011 07:47 PM #5

    I think this topic is distasteful. It also bothers me that this is another first poster and you guys actually answered his morbid topic. None of us are promised tomorrow.

    I would really like to express myself here. but the new me is just going to the bench.

    Signature

    Adversity does not just build character, it reveals it.

         
  • Posted: 01 February 2011 07:56 PM #6

    I?ve been checking out these forums for a while

    horse hockey


    I’m with you Mark.

         
  • Posted: 01 February 2011 07:58 PM #7

    ChasMac77 - 01 February 2011 10:56 PM

    Ok, so if your scenario is correct. Let’s answer some questions.

    1. What kind of position should one (or you) hold in AAPL if you believe that? Stock, stock/options, Cash until you hear otherwise, etc.?

    2. How do you protect to the downside?

    3. How much of a hit will the stock take immediately?

    4. When do you buy if you have available funds? Immediately, 1 day, 1 week, never?

    5. Will you sell none, some, all of your position when that news comes?

    6. Also, do you think that SJ will be back this year?

    Personally, I think it will be one of the better buying opportunities, regardless of what P/E is handed out (it’s already low).
    I’d be interested to hear AFBers answers.

    1. if you believe AAPL is a good company, stock or stock/options (your choice based on your comfort with options and willingness to take additional risk for additional gain)

    2. I don’t, anymore than I protect against an accident at a FoxConn or LCD factory. If I wanted to protect, maybe buy some OTM puts as insurance, but since I’d never know when this event will happen, I’d be constantly rolling them over, losing money everytime.

    3. 10-15% drop immediately, following by a melt back up within the month—my prediction if it happened today—the longer SJ is away, the smaller the drop and shorter the recovery time

    4. buy immediately on the drop (same as with the SJ leave scare)

    5. sell none

    6. very unlikely—if we DO see him anywhere (like at an AAPL event), it means he’s chronically ill vs. acutely ill (my opinion) and just couldn’t stay away

    BTW, I agree that the topic is morbid, but I think the premise of “what should one do on unexpected bad news with little long-term impact but massive short-term influence” is a good thing to consider. Especially since many people are heavily (or all) in.

    [ Edited: 01 February 2011 08:01 PM by snoozzzer ]      
  • Avatar

    Posted: 01 February 2011 08:01 PM #8

    ChasMac77 - 01 February 2011 10:56 PM

    Ok, so if your scenario is correct. Let’s answer some questions.

    1. What kind of position should one (or you) hold in AAPL if you believe that? Stock, stock/options, Cash until you hear otherwise, etc.?

    2. How do you protect to the downside?

    3. How much of a hit will the stock take immediately?

    4. When do you buy if you have available funds? Immediately, 1 day, 1 week, never?

    5. Will you sell none, some, all of your position when that news comes?

    6. Also, do you think that SJ will be back this year?

    Personally, I think it will be one of the better buying opportunities, regardless of what P/E is handed out (it’s already low).
    I’d be interested to hear AFBers answers.

    1.I trade on margin, so immediately lowered my position by half the day the SJ announcemnt was made.

    2. My broker (CMCMarkets) normally offers guarenteed stop loss orders on stocks, but I am unable to currently get this for AAPL “due to uncertainty surrounding health of Steve Jobs”. Once this changes I will set a GSLO and load back up to a full position with confidence that my maximum losses are known.

    3. i would guesstimate a $50 drop, but am prepared for a $100 drop (which would quickly recover most of the lost ground)

    4. I would buy on the first bounce after the initial sell-off.

    5. Assuming I was still half in / half cash, I would not sell any on the initial news - would look to go all in with my half cash at the post announcement price.

    6. Well technically SJ is still CEO and involved with major decisions, but I dont expect him to return as CEO running day-to-day operations. If he does recover I can see him taking a similar position as he is in now that gives him input into major decisions and new products, with Tim Cook officially taking over as CEO. Board Chairman perhaps? or Chief Visionary Officer?

    [ Edited: 01 February 2011 08:06 PM by Burgess ]

    Signature

    Full Disclosure:

    - Long Apple
    - Pro: Apple HDTV, iPhone Air, Stock split, Consumer robotics

         
  • Avatar

    Posted: 01 February 2011 08:22 PM #9

    Have been thinking about this for a long time and if SJ and Tim KNEW that he wasn’t coming back (the “he’s acutely ill” argument), wouldn’t they have just announced that he isn’t coming back? The stock and co. would’ve taken it’s hit and moved forward. Why would they subject it to a “double dip”? Doesn’t make sense to me that someone that cares that much about the co. would do that.

    Personally, we have to not be emotional about the stock and plan for various scenarios. I think it helps to talk about it and gauge other’s feelings as well.

    The Mac changed my life profoundly in 1990. I had really never used a computer until then and it was one of those A-HA moments for me. I’ve had my own company for 15 years based on the skills that I honed on a Mac and it’s been wonderful. I actually wrote SJ way back when about how fantastic I thought the Mac was. He actually took the time to respond to me (from his Pixar account), I thought that was pretty cool that someone of his magnitude would take the time to do that. That solidified my admiration of him and his company. It’ll be a sad day when Steve is no longer running the show but I don’t think that’s going to slow Apple down for a long time.

    Maybe this first post is a type of FUD, who knows. Don’t think that it’s going to scare anyone here out of their shares if it is.

         
  • Avatar

    Posted: 01 February 2011 08:46 PM #10

    nobbish is obviously a new avatar of an existing AFBer.  Taking action too early is costly as my experience demonstrated.  I started selling some AAPLs annually since SJ has a health issue in 2004 :bugeyed:.  Now, get ready for a good laugh :cry:, AAPL sold for $30, $50, $80, $130, $210 and $340.  This year, sold 700 out of 2,000 planned sale for $340 each.  Four more sale to complete the diversification, targets: $550, $890, $1440 and $2330.  Hopefully, this can be done before ... urgh ... $2020 :innocent:.  I should be out of AAPL by 2020 or AAPL~$2330 whichever is earlier tongue laugh.  Just view those $ not earned as cost for a good night sleep.  You can’t have the cake and eat it.

    Signature

    Stay Hungry. Stay Foolish.  - Steve Jobs

         
  • Avatar

    Posted: 01 February 2011 08:53 PM #11

    ChasMac77 - 02 February 2011 12:22 AM

    ... Maybe this first post is a type of FUD, who knows. Don’t think that it’s going to scare anyone here out of their shares if it is.

    It obviously didn’t affect me since I’m merely following my 2004 plan regardless of economic conditions, FUDs and company fundamentals.

    Signature

    Stay Hungry. Stay Foolish.  - Steve Jobs

         
  • Avatar

    Posted: 01 February 2011 09:03 PM #12

    Mace - 02 February 2011 12:53 AM
    ChasMac77 - 02 February 2011 12:22 AM

    ... Maybe this first post is a type of FUD, who knows. Don’t think that it’s going to scare anyone here out of their shares if it is.

    It obviously didn’t affect me since I’m merely following my 2004 plan regardless of economic conditions, FUDs and company fundamentals.

    You’re a smart and wealthy man Mace!

         
  • Posted: 01 February 2011 09:23 PM #13

    I believe Apple’s stock price already reflects Steve Jobs’s departure in whatever form it may be. How can one rationally explain Apple’s Forward PE of 10 (net of cash) with an earnings growth rate of 60% or more? The market does not like uncertainty. Once it is known that he is no longer with Apple the stock price and PE will increase. Yes, outside of a momentary drop (approximately 5%) the stock will rebound and increase as this cloud will no longer exist. Bottom line is that Steve’s misfortune is just another gift he has graced us with. Long live SJ.

    Signature

    Inflation robs from the past, deflation robs from the future. Pick your poison.

         
  • Avatar

    Posted: 02 February 2011 11:57 AM #14

    Jobs factor factored in. Short-term reaction on any further bad news, followed by what IMO will be a rally due to “certainty” regained over succession plans and future management structure.

    Be prepared for a hit, but Apple is no longer JUST Steve Jobs. Jonny Ive and a bunch of other guys have been tutored by Steve and mentored by him. Apple is going to lead the pack for more than the next decade at least.

    I find the first post of this topic distasteful and a simple regurgitation of a load of bile I have read all over the web for countless years, so congrats on making me feel ill agin and thank you for your contribution and invaluable insight, whoever you are.

    Signature

    “Waiter waiter I’m not happy with my Zach Bass. Would you serve it on a silver platter with an apple on the side please?”

         
  • Avatar

    Posted: 02 February 2011 12:07 PM #15

    mbeauch - 01 February 2011 11:47 PM

    I think this topic is distasteful. It also bothers me that this is another first poster and you guys actually answered his morbid topic. None of us are promised tomorrow.

    I would really like to express myself here. but the new me is just going to the bench.

    Oh please. The world’s foremost CEO, who we already know has had a life-threatening illness, takes medical leave with no return date and it’s a verboten topic? Nonsense! This is the Apple Finance Board, not the let’s be thenthitive to the CEO board. This situation can materially impact all of us financially. It’s an unfortunate situation, but ignoring the problem doesn’t make it go away. If SJ passes, God forbid, it will hit the stock hard. The only question is how hard and for how long.

    Let’s be grownups here. If we want to be accurate in our predictions and estimates, we have to account for the strong possibility that SJ never returns. It is absolutely silly to ignore the elephant in the room.

    Signature

    We filed for over 200 patents for all the inventions in iPhone and we intend to protect them. — Steve Jobs, 2007